Monday, April 06, 2009

Bring your questions to Thursday’s forum with Mayor Glover

Plan to attend
Mayor's office forum re: Louisiana's film industry incentives.
WHEN: 3 p.m. Thursday (April 9).
WHERE: Independence Stadium Skybox, Shreveport.
WITH: you, Mayor Cedric Glover, and local and state lawmakers.

Have you been reading the news about Studio Operations (Nu Image/Millennium Films) opening the Worldwide FX visual effects studio in Shreveport? You should pay close attention because this developing story – like the recent announcement of DigiLou Studios – is a very big deal for the local industry. Bringing postproduction and digital animation to this market represents a chance for The Shreve and the state to capture high-paying jobs in the film industry, and seed a new sector that could ultimately drive a big part of the local biz.

If you're local crew member, however, you're more concerned about earning a paycheck now. I get that. It's no secret that The Shreve's production calendar has been startlingly quiet for the first quarter of '09, and not a week goes by that I don't receive an email expressing deep concern about the industry's local future. I hear you, and I'm reporting whatever I can get on the record.

Thursday, however, represents an opportunity to get heard by leaders and lawmakers. If you want to see more movies made in The Shreve and in Louisiana, then go to the mayor's forum Thursday and join an ongoing public dialogue.

For what it is worth, here's what I'm thinking about. This outline might help you frame some of your questions:

What's going to happen with tax credit legislation when the session begins on April 27? Should the state strengthen the incentives or not?

  • Louisiana's production incentive (25 percent) is not as aggressive as Georgia's (30 percent). Will Louisiana legislators re-up the ante in the upcoming legislative session? Will they follow Gov. Bobby Jindal's view and keep it at 25 percent for two more years? It's too early to tell, and the issue is not as cut-and-dry as it seems. In the short term, Georgia's production calendar is outpacing Louisiana's. But will this prove true in the long term?

  • What specific tax credit is the most important to focus on during this legislative session? Locally, some say the emphasis must be put on the production tax credit, because it drives the most business. (It follows, too, that the Louisiana labor tax credit, which effectively boosts the production tax credit from 25 percent to 35 percent for in-state labor, is an important sweetener. Keep in mind, though, that Georgia has a sweetener of its own: it offers a sales tax rebate.)

  • What should be done with the expired infrastructure tax credit? It was worth 40 until the end of 2008, but many of its critics point out that it was never intended to be worth so much (rather, just 15). The sense I have from local conversations is that there will be a push to reestablish it at 15 percent, with its value capped on per project basis. Who knows what will transpire in the end.
    The most interesting argument I've heard is this: "The production credit drives movie production, so it's the most important one to tweak. Strengthen it, and infrastructure will follow when necessary." On the flipside, some argue that infrastructure development (building studios, etc.), is key to the industry's longevity suggesting, "If you don't build it, they will no longer come."
    For The Shreve, which has three soundstage production facilities and will have four before the end of 2009, this is a big issue.
    The questions you should be asking here are: Do we have enough infrastructure to sustain the current industry and foster growth, or do we need more? And what should a renewed infrastructure credit look like?

  • Are local lawmakers in northwest Louisiana looking to add local incentives, like the 3 percent tax rebate in Jefferson Parish (capped at $100,000 per project), and would it be cost effective?

  • Do Louisiana's incentives add up to true economic gain for the state? You need to read every inch of this report to answer this. You also need to think about the driving idea of the original legislation: the incentives were designed to build an indigenous, or more self-sustaining, industry.
    We're a couple years into a modified program which specifically focuses on in-state investment, and the gains in Shreveport have been big. Have the gains, though, been big enough to justify the program's cost? Does the program simply need more time to bear more fruit?
    Understand that the program is costly. In 2007, for instance, the ERA study estimated that the incentive program cost the state about $115M in tax credits. It estimates the state would recoup $15M in state taxes.) That same report also claimed the industry spent more than $429 million in Louisiana in 2007, resulting in an economic impact of $763 million in 2007.
    Is it worth it? If you read the report as truth, then yes. In my mind, however, the best way to prove any big benefit is to cut it into bite-sized pieces. If you want to make your case the program pays off, then quantify your gain personally and talk about with the lawmakers. If you are below-the-line crew, how much money do you make from the film industry? What were your state taxes? And how much money do you re-spend in La.'s economy (through food, rent, etc.)?
  • Again, is it too soon to think about sunsetting the film industry credits, as currently scheduled? Given the competitiveness of Ga. and Mich., can La. expect to hold its ground with the incentive program as it stands? On the contrary, should Louisiana refuse to get into an arms race with other states and simply hold its ground? Considering the national incentives race between states, at what point is Louisiana giving away the proverbial store? Read this story about Wisconsin industry study, which suggests incentives don't create real jobs. And read this story, from the Boston Herald, about study that suggests film incentives won't pay off in the long run. Don't discount the challenge of justifying an incentive program during a recession economy. State legislators are going to be feeling big pressure to make big cuts during their upcoming session.

Locally, how can northwest Louisiana regain a competitive edge and its momentum? There is a lot to think about on this front:

  • I spoke about this with Shreveport Mayor Cedric Glover at last Friday's press conference for Worldwide FX. Glover's up-to-speed on where the industry stands and its competitiveness with other states. To him, Worldwide FX "represents another successful step in building up that infrastructure" that sustains the industry, and, as we're often reminded, spends money locally.
    Glover's aware that production facilities like Mansfield Studios (run through Louisiana Production Consultants), Stage West, and StageWorks of Louisiana – along with Nu Image/Millennium – drive activity in the local production industry. On city-leased land, Nu Image/Millennium is adding their $8 million studio by the end of the year. About the studio, Glover said, "We are without question undaunted in our efforts" with the new studio. "It will come to a full and complete development."
    These are all signs that The Shreve has a good start.

  • In nearly the same breath, Glover talked about The Shreve's need to "cultivate a niche" in small- and midsized independent film and TV production. This is a really important point. Small- to midsize projects have driven our market's growth to this date, and many believe it will continue to be these types of projects – count "Leaves of Grass," "Skateland," "Wonderful World," "Harold & Kumar 2" and "Streets of Blood" in this class – which drive the local industry. Major studio projects like Sony's "The Year One" are welcomed by local industry – and courted – but they're really just gravy. That's to say, "If the biggies come, fantastic. If they don't, then we have our bread and butter niche to keep us going."

  • I also spoke with Studio Operations prez Diego Martinez (that's the local arm of Nu Image/Millennium) about this, and its move to add Worldwide FX. Why set up a visual effects shop? It keeps its movies close to home and inside Louisiana, for one, and secondly, it also allows Studio Ops to service its own projects. "We ultimately want to have full post-production in Shreveport," Martinez said. If that's not a statement of commitment to the local industry, I don't know what is.
    If Studio Operations can grow and ultimately finish its films Louisiana-shot films in Louisiana, it more fully becomes that "indigenous" industry everybody has been eying from the get-go.

  • Does this company, and the rest, have the support they need to regain momentum?

  • Do we have enough trained crew? Are they remaining in the area or leaving for jobs elsewhere?

  • If you're crew, do you have transferable skills that can be moved from one industry sector to another? Can you acquire them through Worldwide FX, or the Animation and Visual Effects Program at LSUS? Digital animation and special effects are positioned to grow in this market, and it's a good idea to explore these opportunities.

  • Is the local industry diverse enough to weather economic downtowns like the current recession? Think about all of these questions if you want to have a stake in the conversation.

Now the efforts of Mayor Glover, Diego Martinez and industry leaders are important, but yours are equally so. If you have concerns about the industry's competitiveness – and are deeply concerned by not getting work for weeks or months – then you need to attend the Mayor's forum on Thursday at the Independence Stadium Skybox. It's a chance for you to connect with local lawmakers as they continue to analyze the incentive program and map out the best course of action. "Part of what I intend to do is give them a chance to tell me" what needs to be done, Glover told me last week. I'd answer his call.


cosmicdingo said...

Your article is very informative. Hope the Legislature backs the Jindal proposal,or mebbe sweeten the pot, though you're right about racing other states to the bottom. How long before the program no longer makes money for the state?

Alexandyr Kent said...

Good question. I don't exactly know, but the tolerance level seems to be settling between 20 and 30 percent for production credits.